Vivo was the only operator to receive in the third quarter of 2007 (Q307) a medal for leading on 2 of 7 indicators in which Teleco follows the performance of mobile operators in Brazil. In addition to maintain leadership in market share, Vivo regained leadership in net revenue which was lost to Tim in the Q207.

Vivo would also acquire a medal of quality if Telemig was joined to its operations.

In the Q307 there was a balance between the other operators. For the first time in the year each of them had a leadership medal.

Tim had won 3 gold medals in the first 2 quarters of the year kept leadership in coverage in the Q307. Claro kept leadership in growth and Brasil Telecom made the best ARPU of the quarter. Oi led in profitability and Telemig / Amazon in quality.

It's following below an analyse of these results.

Market Share: Vivo maintains leadership

Vivo continues being the largest mobile operator in Brazil with 31.3 million cell phones and market share of 27.78%. It is the leader in market share in 2 Regions, 11 units of the Federation (UF) and 26 of the 67 local areas (DDD). (More details)

Q307

Market
Share

Cell Phones
(thousands)

Leader in Market Share

Region

UF

DDD

Vivo

27.78%

31,320

II and III

11

26

Tim

25.87%

29,160

-

8

19

Claro

24.82%

27,981

-

3

8

Oi

13.21%

14,900

I

4

10

Telemig/Amaz.

4.37%

4,927

-

1

4

BrT

3.57%

4,024

-

-

-

The main change in the Q307 was the lost of Telemig's leadership in Minas Gerais to Tim. Oi leads in Region I again.

With the joint venture Telemig/Amazônia, Vivo in the Q307 would:

have 36,247 thousand cell phones and market share of 32.15%, increasing the difference between Tim and Claro.

Occupy the 3rd position in market share in Region I, exceeding Claro.

Lead in 12 Units of Federation (UF) and in 31 of the 67 local areas (DDD).

The joint venture wouldn't be enough to Vivo exceed Claro in growth.

Growth: Claro leads and Oi surprised

Claro kept net adds leadership in the quarter and in the accumulated of the year, reducing its difference of Tim to 1.2 million cell phones.

Oi was the highlight of the quarter. After losing leadership in Region I in Jun/07 Oi was the operator that most grew in Jul/07, reversing a trend of low growth that is extended by almost 1 year. (more details).

Oi's growth is associated to the success of the promotion "Ligador" to pre-paid cell phones. In this promotion, making a monthly recharge of R$ 10 the costumer gets a monthly bonus of R$ 100 for calls Oi to Oi or Oi to fixed. The states Ceará and Pernanbuco were responsible by 42% of Oi's net adds.

Tim loses leadership in Revenue and ARPU

Vivo has taken over net revenue leadership in the Q307 with R$ 3,248 thousands against R$3,163 thousands of Tim mainly by the increase in the revenue of subscribers and usage.

R$ Thousands

Q107

Q207

Q307

Revenue Share

Vivo

2,851

3,021

3,249

29.7%

Tim

2,843

3,060

3,163

29.0%

Claro

2,155

2,431

2,538

23.2%

Oi Celular

1,000

1,028

1,063

9.7%

Telemig/Amaz

432

461

463

4.2%

BrT

385

429

449

4.1%

Tim leads at the front of Vivo in services net revenue with $ 2,878 thousands, against $ 2,846 thousands in Vivo. The long distance (41) is part of the Tim's revenue, which also only occurs with Oi.

Brasil Telecom (BrT) assumed leadership in monthly average revenue per customer (ARPU). This result was obtained by the growth in ARPU between post-paid customers which was $ 49.8 in Q207 to $ 57.7 in Q307.

ARPU R$

Q107

Q207

Q307

BrT

33.4

33.8

34.9

TIM

34.4

34.6

34.0

Vivo

30.0

29.9

30.8

ARPU Brazil

29.3

29.4

29.6

Telemig

27.6

29.2

29.1

Amaz Cel

28.4

28.9

28.7

Claro

27.0

27.0

27.0

Oi

21.6

21.5

22.3

Profit

The Oi Celular was the leader in profitability in Q307, with EBITDA and EBIT margins above the rest. Oi, Telemig / Amaz. and Vivo had great profit in the quarter.

Q307

EBITDA

Margin

EBIT

Profit
(R$ Millions)

Oi

33,2%

15,2%

92

Telemig/Amaz

30,0%

13,4%

30

Claro

25,0%

0,2%

ND

TIM

17,3%

-0,7%

-122

Vivo

25,7%

7,5%

4

BrT GSM

7,6%

-13,8%

-30

Oi's EBITDA margin rose from 19.3% in Q107 to 25.9% in the Q207 and 33.2% in Q307. Oi's EBITDA margin accumulated in the first 9 months of 2007 was 26% against 13.6%. Contributed to improving the Oi's profitability decrease with the sale of devices and marketing.

Coverage and Quality

Tim is the only operator present in all States, is leader in population and cities attended.

Operator

Population

Cities

Tim

86%

45%

Claro

78%

42%

Vivo

67%

42%

Oi

39%

15%

Brasil Telecom

21%

14%

Telemig/Amaz

15%

10%

With Telemig's joint venture Vivo would have coverage in Minas Gerais, only missing the operation in the Northeast states (area 8) to reach national coverage. Vivo would assume leadershio in covered cities(48%), but would continue 3rd in population attended (76%).

Telemig/Amazônia Celular was leader in attendance quality goals in the Q307.

Attended Goals

Q107

Q207

Q307

Telemig/Amaz

98.0%

100%

100%

Vivo

91.0%

97.2%

99.2%

Claro

92.3%

95.1%

98.1%

Brasil

94.3%

96.5%

97.1%

BrT GSM

96.0%

94.4%

96.0%

Tim

97.9%

95.9%

94.9%

Oi

79.5%

100%

84.8%

Telemig / Amazon cellular attended 100% of the quality goals in Q307. Oi which had also achieved 100% of the goals in the previous quarter, decreased mainly because of missed goals in aug/07. (more details).